Property Income and Tax

12 October 2025

Property Income and Tax: What Landlords Need to Know for 2025

As we approach 2025, property taxation continues to evolve, and landlords must stay informed to avoid unexpected liabilities. Whether you own one rental property or manage a portfolio, understanding how your income is taxed is key to keeping your investments profitable and compliant.

Rental Income and Allowable Expenses

All rental income must be declared on your Self-Assessment tax return. From this, you can deduct allowable expenses such as:

• Letting agent fees
• Repairs (not improvements)
• Insurance and utilities you pay
• Accountancy and professional fees

It’s important to distinguish between repairs, which are deductible, and improvements, which may be treated as capital expenditure.

Mortgage Interest and Finance Costs

Since mortgage interest relief was restricted to a basic-rate tax credit, higher-rate landlords can face higher tax bills. This rule remains relevant for 2025, so factor reduced relief into cashflow and profitability planning.

Capital Gains and Future Planning

If you sell a property, any gain is subject to Capital Gains Tax (CGT). The annual CGT allowance has been reduced in recent years, and reporting plus paying CGT on residential property sales must be completed within 60 days of completion — so timely planning and advice are vital.

Digital Reporting and Preparing for MTD

Making Tax Digital (MTD) for Income Tax is on the horizon, with landlords over £50,000 rental income expected to keep digital records and submit quarterly updates from April 2026. Adopting cloud accounting software now will smooth the transition.

Keep records up to date and seek professional advice early to remain compliant, minimise tax exposure, and make informed property decisions in 2025 and beyond.